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| [ Introduced ] | [ House Amendment 001 ] |
90_HB0401eng
35 ILCS 5/205.5 new
Amends the Illinois Income Tax Act. Provides that higher
education saving accounts are accounts established by a
qualified taxpayer for the purpose of saving for eligible
education related expenses of the account holder, spouse, or
child associated with attending a public or private
institution of higher education. Provides that a qualified
taxpayer shall have an annual adjusted gross income of less
than $100,000. Provides that, beginning with taxable years
ending on or after December 31, 1997, the principal and the
income earned on these accounts is exempt from taxation under
the Illinois Income Tax Act if the money in the accounts is
used for eligible education related expenses. Provides that
if the principal in or any income earned on money held in the
higher education savings account is used for any purpose
other than eligible education related expenses, that
principal or income shall be subject to taxation under the
Illinois Income Tax Act and, in addition, the account holder
shall incur a penalty in an amount equal to 10% of that
principal or income used for purposes other than eligible
education related expenses. Provides that the Department of
Revenue shall promulgate rules necessary to enforce and
implement these provisions. Provides that these provisions
are exempt from the provisions concerning the 5-year
automatic sunset. Effective immediately.
LRB9000154KDksD
HB0401 Engrossed LRB9000154KDksD
1 AN ACT to amend the Illinois Income Tax Act by adding
2 Section 205.5.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Illinois Income Tax Act is amended by
6 adding Section 205.5 as follows:
7 (35 ILCS 5/205.5 new)
8 Sec. 205.5. Higher education savings account exemption.
9 (a) Definitions. As used in this Section:
10 "Higher education savings account" means an account
11 established by a qualified taxpayer for the purpose of saving
12 for eligible education related expenses associated with
13 attending an institution of higher education. These accounts
14 may be established with any of the following:
15 (1) A national or state chartered bank, a federal
16 or state chartered savings and loan association, a
17 federal or state chartered savings bank, or a federal or
18 state chartered credit union.
19 (2) A trust company authorized to act as a
20 fiduciary.
21 (3) An insurance company authorized to do business
22 in this State under the Illinois Insurance Code.
23 (4) A dealer, salesperson, or investment adviser
24 registered under the Illinois Securities Law of 1953.
25 "Eligible education related expense" means an expense
26 paid by the account holder for costs incurred by the account
27 holder or the spouse or a child of the account holder to
28 attend a public or private college, community college, or
29 university on either a full-time or part-time basis.
30 "Eligible education related expense" shall not be limited to
31 tuition but shall not include expenses incurred in purchasing
HB0401 Engrossed -2- LRB9000154KDksD
1 a motor vehicle.
2 "Qualified taxpayer" means a taxpayer with an annual
3 adjusted gross income of less than $100,000.
4 (b) Beginning with taxable years ending on or after
5 December 31, 1997, except as provided in subsection (c), the
6 principal in and the income earned on a higher education
7 savings account is exempt from taxation under this Act.
8 (c) If any principal or income earned on the principal
9 in the higher education savings account is used for any
10 purpose other than eligible education related expenses, that
11 principal or income shall be subject to taxation under this
12 Act; in addition, the account holder shall incur a penalty in
13 an amount equal to 10% of that principal or income used for
14 purposes other than eligible education related expenses.
15 (d) The Department shall promulgate rules necessary to
16 implement and enforce the provisions of this Section.
17 (e) This Section is exempt from the provisions regarding
18 the sunset of exemptions, credits, and deductions provided in
19 Section 250 of this Act.
20 Section 99. Effective date. This Act takes effect upon
21 becoming law.